A Better Name than "Nonprofit"

We all know businesses are out to make a profit, either for the owner or for their shareholders. And I think we would agree that, for the sake of our financial markets and the economy at-large, this is a good thing. So for years, I’ve advocated for replacing the terms “Nonprofit” and “Not-for-profit” with “Social Benefit Organization” for several reasons.

For one, some nonprofits actually turn a profit. A profitable nonprofit may sound like an oxymoron, yet, in places like the United States, where 94% of all charitable giving goes to only 6% of nonprofits, only the strong and innovative survive. If a nonprofit’s profits are reinvested to further an organization’s stated mission, let them make money. But don’t call them “nonprofit.”

If a nonprofit’s profits are reinvested to further an organization’s stated mission, let them make money. Don’t call them “nonprofit.”

Ballets, rare disease researchers, animal rights activists, do-gooders, world-changers… we need them all. They solve issues governments and corporations may not want or have the resources to solve.

Labeling a company “nonprofit” implies inefficiencies in their model. That’s unfair to the multitude of organizations that effectively leverage volunteers, employ innovative revenue-generating activities, and practice strong governance.

Labeling a company “nonprofit” implies inefficiencies in their model.

Nonprofits exist to deliver social services. Why not define them by what they do for the world? Let some nonprofits turn a profit; let some depend entirely on public support; let some live off of a huge endowment; let others be hybrids.

A simple terminology change can have a profound effect on perceptions. George Carlin once remarked that the term “Shell Shock” was softened-out over the decades into “Post-Traumatic Stress Disorder.” He argued that the modern term marginalizes the severe impact “Shell Shock” has on our soldiers.

Leo Ramirez is CEO and co-founder of Encast. He was a very good tennis player when he was young. But he was even better with numbers. His dad told him to stick to math. Leo wanted to be at center court in Wimbledon. But his dad was smarter than he was. Now Leo runs a technology company. And tells people to listen to their parents.

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